Staff at Lehman Brothers who lost their jobs after the bank collapsed will be paid one month’s salary.
The bank’s administrator, PricewaterhouseCoopers (PWC) has confirmed that employees who continued to report to work as the investment bank went into administration will be paid by 30 September.
However, Helga Breen, partner of the employment group at law firm Lawrence Graham, said that Lehman Brothers staff may have grounds make claims for unfair dismissal and protective awards if PWC is unable to go through the statutory 90-day consultation process with employees before effecting the first dismissal.
“Unfair dismissal claims may not seem attractive given that the compensation is capped and that the chances of recovering any money from Lehman are uncertain at this stage. However, Lehman Brothers may still face the risk of a class action by disaffected staff for protective awards of up to 90 days’ gross pay for every employee who has been or will be dismissed. The fact that the Employment Tribunal can award compensation covering every employee who has been dismissed and in respect of whom there has been no consultation with employee representatives means that just one aggrieved ex-Lehman employee can act as a stalking horse for the whole class,” she said.
Breen added that although employees could receive up to £2,640 each from the government-backed National Insurance Fund they may be better off “holding out for what they can get by way of dividend out of any subsequent winding-up. Some of their total claim (up to £800) will be treated as a preferential debt but the rest would be unsecured an they will have to take their chances with the rest of the creditors”.
Some jobs at Lehman Brothers could be secure after Barclays and Nomura submitted formal proposals to PWC to buy the parts of the investment bank in Britain and Europe. Dan Schwarzmann, partner at PWC, said: “We are in discussions with interested parties to sell the Lehman Brothers Asset Management and Corporate Finance Business. Our duty is to maximise value for creditors and the best way to do this is to keep each team together. In this way the interests of both staff and creditors are aligned. We are in discussions with potential partners at present and our aim is to complete a deal in the next few days so as to create certainty for all involved.”